Question:
Will there not be a time lag? This will most commonly cause frictional unemployment- will this not negatively affect the economy for a short period? How does the government plan to accommodate this potential negative growth?
Monday, September 27, 2010
Cuba issues plans to expand its private sector
After cutting down many public sector jobs, Cuba has finally relaxed some of it policies on private employment. They are now giving out licenses to people to run their own businesses and be self employed. "Under the new rules, Cubans will be able to rent out rooms to tourists, work as self-employed gardeners, iron clothes and shine shoes". The government believes that this will increase productivity and efficiency in the economy.
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3 comments:
Increasing the private sector is a very realistic approach to fixing the stagnation that has penetrated the Cuban economy. A change has been a long time coming and maybe there will be a lag but I think that increasing the private sector, even though it seems to be minor reforms, will help to increase relations with the United States and hopefully bring in trade and tourism.
There will definitely be a huge time lag and most likely a long time of economic hardship as they start this transition. However, people will be able to start small businesses (maybe with the aid of microfinance?) to sustain themselves through it. Of course the time lag would also be significantly shorter if the US repealed its sanctions
I agree with Becky. The US is one of the only countries that continues to have sanctions against Cuba. This effort to increase private employment seems like a step in the right direction for Cuba that should be taken into consideration by the US. Perhaps if they were to life the sanctions the US could be influential for Cuba and encourage them to develop beneficial programs such as this increased private employment.
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